Correlation Between Sunny Optical and Honeywell International
Can any of the company-specific risk be diversified away by investing in both Sunny Optical and Honeywell International at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sunny Optical and Honeywell International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunny Optical Technology and Honeywell International, you can compare the effects of market volatilities on Sunny Optical and Honeywell International and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sunny Optical with a short position of Honeywell International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Optical and Honeywell International.
Diversification Opportunities for Sunny Optical and Honeywell International
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sunny and Honeywell is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and Honeywell International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honeywell International and Sunny Optical is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sunny Optical Technology are associated (or correlated) with Honeywell International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honeywell International has no effect on the direction of Sunny Optical i.e., Sunny Optical and Honeywell International go up and down completely randomly.
Pair Corralation between Sunny Optical and Honeywell International
Assuming the 90 days horizon Sunny Optical Technology is expected to generate 2.84 times more return on investment than Honeywell International. However, Sunny Optical is 2.84 times more volatile than Honeywell International. It trades about 0.23 of its potential returns per unit of risk. Honeywell International is currently generating about 0.46 per unit of risk. If you would invest 612.00 in Sunny Optical Technology on September 1, 2024 and sell it today you would earn a total of 132.00 from holding Sunny Optical Technology or generate 21.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sunny Optical Technology vs. Honeywell International
Performance |
| Timeline |
| Sunny Optical Technology |
| Honeywell International |
Sunny Optical and Honeywell International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Optical and Honeywell International
The main advantage of trading using opposite Sunny Optical and Honeywell International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Optical position performs unexpectedly, Honeywell International can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Honeywell International will offset losses from the drop in Honeywell International's long position.| Sunny Optical vs. Altair Engineering | Sunny Optical vs. MGIC INVESTMENT | Sunny Optical vs. PennyMac Mortgage Investment | Sunny Optical vs. REGAL ASIAN INVESTMENTS |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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